Reliance Jio 4G may pose more risks to Vodafone than Bharti Airtel: CLSA

Reliance Jio's 4G launch is expected to pose significant risks to market shares of the top two telecom operators -- Bharti Airtel and Vodafone India -- as their high-value subscribers may become "early adopters" of the high-speed data services offered by the telecom arm of Mukesh Ambani's Reliance Industries, said a global brokerage firm.

Of the two, Vodafone is more vulnerable to Reliance Jio services as it holds limited 4G spectrum, according to CLSA.

"As high-ARPU (average revenue per user) subscribers are likely to be early adopters of 4G, the two highest-ARPU operators are at a higher market share risk with new entrant Reliance Jio's launch of 4G services," CLSA said in a note released on Thursday.

Airtel has already rolled out its 4G services in more than 300 towns in the country, while Vodafone recently launched services in Kochi, Kerala. Vodafone plans to expand its 4G coverage to the metros by the end of December.

As revenue from voice services is becoming flat, the telecom operators will vie to gain premium data customers in the coming months, it said.

Going forward, the long-term growth of the telcos is likely to be led by mobile data usage, the revenue from which is projected to increase by three times to $14 billion (Rs 93,800 crore) in FY18 from FY15, according to CLSA.

3G penetration in the top five markets -- Mumbai, Delhi, Kerala, Karnataka and Tamil Nadu -- is twice that of 3G connections in the remaining 17 markets and accounted for over 40% of 3G users in the country.

Bharti Airtel and Vodafone India are the leading players in the top five data markets, where the APRU is Rs 225, up 40% compared to the industry average of Rs 161.

"However, in these markets, Bharti Airtel not only has comparable spectrum to Reliance Jio to defend its turf, but also has launched its own 4G services, leaving Vodafone, which has limited 4G spectrum, as the more vulnerable of the two," The Economic Times quoted CLSA as saying.